§ 102. When mere silence is a waiver. In this class of cases, mere silence on the part of the company may, under certain circumstances, amount to a waiver. Thus, where the policy limits the amount of time within which the insured may file his proof of loss, if the company receives a defective proof, says nothing about it at all, and then, after the time has expired, raises objection, it is held to have lost the right so to do by not notifying the insured within a proper time that the proofs, as he originally sent them in, were unsatisfactory (18).

(18) Insurance Co. v. Cusick, 109 Pa. 157.

CHAPTER V.

LOSSES COVERED BY POLICY.

§ 103. Introductory. In general the kind of loss that is covered in marine, or fire, or life insurance, is indicated by the very name of the insurance. Thus, in general, it may be said that marine insurance covers losses on the sea, fire insurance losses by fire, and life and accident insurance death, or injuries of one kind or another to the person. In order, however, to understand somewhat more in detail the rights of the insured under these various forms of policies, it will be necessary to examine more carefully the exact language of the policies.

SECTION 1. MARINE INSURANCE.

§ 104. Language of policy. The most important losses provided against in marine insurance are against "those of the seas barratry of the master and mariners and all other perils, losses, and misfortunes."

fires

§ 105. Kinds of losses covered. In the first place it is to be noticed that there are two kinds of loss in marine insurance: actual and constructive. An actual loss takes place when the subject matter of the insurance, the vessel or cargo or freight, is actually destroyed so that it no longer exists in specie. A constructive loss takes place

when the vessel, for example, still exists as a vessel, but is so situated, because of a peril insured against, that a prudent owner would be justified in abandoning it, or is so badly damaged by a peril insured against that the loss exceeds one-half the value. The same principle applies to the cargo or to the freight. A constructive loss exists with the latter, where either it cannot be earned or to earn it would cost more than it would be worth (1). Under any of the above circumstances, the insured may treat the property as "constructively" lost and "abandon" it. That is to say, he gives notice to the insurance company that he elects to treat it as a total loss. He may then recover on his policy as for a total loss, and the property abandoned goes to the company.

§ 106. "Perils of the sea" cover only those losses which result from the unusual and extraordinary action of the elements. The mere ordinary wear and tear on the vessel is natural, and obviously could not fairly be expected to be covered by the insurance. Thus, the gradual depreciation of the machinery, the wearing out of the sails, the chafing and straining of the rigging, are none of them covered by the policy. On the other hand, losses by sudden storms, by shipwrecks, or by any unusual actions of nature resulting in loss or injury are covered. Whether an injury to the vessel was by a "peril of the sea," within the meaning of the policy, in many cases depends upon what are the usual conditions of navigation in that regard. Two cases somewhat similar on the facts will illustrate this difference. In one case, a vessel went into a tide

(1) Bradlie v. Ins. Co., 12 Pet. (U. S.) 378.

harbor and as the tide ebbed lay on the bottom. The beach however was somewhat sloping and the result was that the vessel had a list which finally strained her to such an extent that she was broken. In this case the court held that the damage could not be recovered, since the vessel was put aground purposely, as was intended, and the character of the harbor was such that the grounding and listing in this way were to be expected (2). On the other hand, where in a similar case the vessel entered a tidewater harbor, but, owing to the presence of an unusual swell, she struck ground with violence much greater than common and was injured therefrom, the loss was held to be within the policy (3).

§ 107. Collision. Collision is also a peril of the seas within the meaning of the policy, though often covered by a separate provision. It makes no difference whether the collision is brought about by the action of the elements or the negligence of the navigators, for it is a general principle of the law of insurance, applicable not only to marine, but also to fire and life insurance, that the neglect of the person insured is one of the risks that the insurer takes upon himself. But where the loss is due, not primarily to the negligence of the navigators, but to an original defect in the equipment of the vessel, the insurer is not liable (4).

§ 108. Loss on board vessel. The mere fact that the loss takes place on board the vessel does not render it a loss by peril of the seas within the meaning of the policy.

(2) Magnus v. Buttemer, 11 C. B. 876.

(3) Fletcher v. Inglis, 2 B. & Ald. 315.

(4) Marine Insurance Co. v. Hamilton, 12 App. Cas. 484.

Thus, in one of the leading cases of this kind the facts were as follows: A steam-boat was at anchor, and an attempt was made to fill the main boiler by means of a donkey engine and pump. The pipe leading from the pump to the boiler had been negligently stopped up, so that when the attempt was made to pump the water the pump was broken through the unusual pressure put upon it. This was held not to be a marine loss (note 4, above).

§ 109. Barratry. Barratry includes any wilful misconduct by the captain or sailors of a vessel to the prejudice of the owner of the vessel. Thus, scuttling or burning the vessel, wrongfully disposing of the cargo, breach of port regulations, exposing the vessel to forfeiture, are various illustrations of barratrous conduct. A merely negligent act is not barratrous; but, on the other hand, there need be no specific intent to injure the owner of the vessel. Thus, where the captain, in defiance of the orders of the owners, stowed the cargo on deck instead of under the deck as instructed, and a loss resulted therefrom, this was held to be barratrous within the meaning of the insurance policy (5).

§ 110. Fires. The fire losses within the meaning of the marine policy will be sufficiently treated under the section on fire insurance, beginning with § 112, below.

§ 111. All other perils, losses and misfortunes. The final general clause in the marine insurance policy, covering all other perils, is not as broad in its scope as might be thought. The courts have construed this to cover only other perils of a nature similar to those already specifi

(5) Atkinson v. Insurance Co., 65 N. Y. 531.